Everyone’s a Day Trader Now
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wsj.com
If there are considerably less entertainment locations in cities, moving to the city could potentially become a lot less attractive, especially for young people. Combined with the current push for remote work by workers and companies alike this could push real estate prices way down.
Obviously the most valuable part of a city is its demographics. Especially young college educated people, and in really big metropolises, the ones with the hottest real estate markets, of single college educated people between 20-40.
To keep this focused, the day trading is mostly caused by returns. That's not saying much. It's pretty crazy how much the retail trader has been outer-performing some classes of professionals though, especially in the last quarter. [1] It isn't on like, having a sophisticated market thesis obviously.
It's just this huge, persistent, ugly refutation of the finance professional. Index investing was the vanguard not the main force; retail trading is the main force.
[1] https://www.barrons.com/articles/retail-traders-are-beating-...
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It’s all fun and games until the market tanks for an extended period of time and people that cannot afford to be are over leveraged in stock.
If the market tanks for a long time, that's a big problem for everyone (directly or indirectly).
Every market has what's called a bid/offer spread. That's the difference between the price the next buyer will pay, and what the next seller will accept (if the prices were the same, it would result in a trade, and thus back to having different prices). Market makers earn this spread by always being willing to buy low and sell slightly higher. Robinhood traders are largely unsophisticated and place market orders that cross this spread and thus incur the implicit cost. Market making has become to automated that these small spreads (pennies in many cases) are actually extremely lucrative.
So, Robinhood goes out to a market maker and says "you can execute all my trades for me, but you'll have to pay me for the privilege because I know you'll make a lot of money off my trades". This is called payment for order flow, and Robinhood makes a lot of money this way.
The bid-ask spread on some of the questionable options Robinhood traders are transacting in is quite a bit higher, though.
Source: former head of quant trading for multi billion dollar hedge fund
People day trading options may be just as well off in a down market, since they can buy puts or volatility indexes to make money on any direction of market movement.
Or is that adage bullshit like everything else related to the economy too?
https://ia601609.us.archive.org/21/items/in.ernet.dli.2015.1...
p.238 "Messenger boys established foreign exchange businesses and speculated in currencies of all lands. Towering over all of them was the gigantic figure of the super-profiteer Stinnes. Expanding his credit and exploiting the mark, he bought whatever was for sale, coal mines and ships, factories and stocks, castles and country estates, actually for nothing because every payment, every promise became equal to naught. Soon a quarter of Germany was in his hands and, perversely, the masses, who in Germany always become intoxicated at a success that they can see with their eyes, cheered him as a genius. The unemployed stood around by the thousands and shook their fists at the profiteers and foreigners in their luxurious cars who bought whole rows of streets like a box of matches ; everyone who could read and write traded, speculated and profited and had a secret sense that they were deceiving themselves and were being deceived by a hidden force which brought about this chaos deliberately in order to liberate the State from its debts and obligations."
FWIW the guy who brings and empties my skips was giving me tips on Covid medication stocks last week...
Our monetary system is based on a plan instituted 1oo years ago, before credit cards, electronic banking and and international market for finance. The Fed either changes the rate at which banks borrow money or buys financial instruments outright. This was fine back in the day when the main job of banks was making loans to people to buy homes (See It's a Wonderful Life). However today, money will will seek the highest ROI and stays in the financial system. We are seeing inflation of financial products (stock market bubble) despite record unemployment. Other weird things are booming house sales with record low interest rates. Until money is put in the hands of people who will spend it, we will never have inflation. NO MATTER HOW MUCH MONEY IS PRINTED.Today when I hear the word 'productivity' and 'growth' I realize it is not talking about the real world where there are mouths to feed and people who need a roof. Rather these words are talking about another entity, capital.
why are they doing it if they cannot afford to do it? If someone made a conscious decision to day trade with money they cannot afford to risk, they have to accept responsibility for losing it when the markets turn sour.
> they have to accept responsibility for losing it when the markets turn sour
I wouldn't be surprised to see a similar rule for options trading come out of this.
There is no restriction on being able to trade options with less than 25k in an account.
I'd indeed meant that the pattern day trade restrictions of USD 25k also applies to Options Traders who seek to day-trade Options in the U.S.
This was just my observation/information-sharing, and not a disagreement with anyone.
If you’re talking about “Most of the time”, most of the time you will lose the lottery, but make money on buying a stock, on average at the overall rate of return of the market as a whole.
Retail investors (aka people buying stocks as investment) are unaffected by that limit.
This isn't true in the slightest. Market makes might favor liquidity providing strategies but the vast majority of day traders do not. Retail day traders are trading lower volumes and do not move markets. They are much more advantaged in this respect (although they typically lack the informational edge of pros).
> It's easy for commercial investors to push out retail traders because they can provide more liquidity.
This just also isn't true at all. Everything has a price, including liquidity and as a perfectly fungible good, it doesn't matter who the seller is. Exchanges operate on price-time priority so if you provide liquidity at a better price, or before someone else, then it doesn't matter how big you are or how much you provide (within the context of vanilla ETPs relevant to day trading).
You do realize that lotteries have negative expected value right? That means that the net losses of losers exceed the net gains of winners...it's the epitome of unfair.
> With trading, most of the time, they will lose and someone with millions in the bank will win.
This just sounds like someone with an anti Wall Street chip on their shoulder. In most industries, the "winners" have millions in the bank...that's how they got the millions.
[0] https://fivethirtyeight.com/features/what-percentage-of-stat...
Another way to look at laws is that they protect the public from the predatory forces that we can't seem to just outlaw outright. Because PACs get in the way of legislation for the public good.
I'm sure there's some other way to look at it but I've already found at least one I agree with.
But regulating something where the sole requirement to access it is to just have more money, is ridiculous. If trading options is so dangerous, requiring a license might make sense. Requiring that you just be rich to do it makes no sense.
Will some people get burnt with YOLO options trades? Absolutely. But guess what, holding onto cash in a savings account is getting you burnt right now too, its just happening too slow for most to realize.
In reality, we are all traders and virtually every financial action we take (or don't take) is a trade. Doing nothing with your money is a trade. Buying a house is a trade. Investing in a 401k is a trade. Buying pokemon cards is a trade.
The fact that the current generation of high schoolers/college kids think investing and trading is cool is actually a really good thing. The world is becoming increasingly financialized and they need to understand this. The financial gatekeepers have had their fun for long enough.
Citadel must be making a killing on market making, right now.
When that happens, retail investors in Utah or Uganda will be able to short TSLA on a web app; no regulators involved, thank you very much. The implications are exciting and concerning.
Self-sovereignty is a technical characteristic of blockchains where nobody can prove you own a asset or did a transaction. That makes it hard to prove tax compliance or non-compliance.
To those who think Ethereum on-chain activity is merely pseudonymous and not private, you're correct, but only temporarily, because zero knowledge platforms are arriving and will enable many common financial activities to be performed in a truly private context.
This has nothing to do with people paying or evading taxes after a trade.
Putting something on a chain does not mean current regulations do not apply. If by "no regulation" they mean peer to peer trades have less regulation, I'm not quite sure about that but if it becomes the most common way to trade I'd be surprised it would stay that way.
Can Americans legally trade securities and other financial instruments on an unregulated exchange? I think no - my neighbor Bob can't just open up a stock brokerage, and I dont see how this is any different.
Engaging in illegal financial transactions also makes it harder to seek recourse when you're defrauded.